InsightsNewsletterRenatus’ Private Equity M&A Newsletter – 07/07/2024

Renatus’ Private Equity M&A Newsletter – 07/07/2024

07/07/2024 renatus newsletter

Thought for the Week

While most column inches this week have been devoted to European football and UK politics, we decided to take a look at an economic story closer to home. Last weekend saw several bumper days of trading across Dublin’s hospitality sector, largely thanks to the much-covered trio of Taylor Swift concerts in the Aviva Stadium. According to the Bank of Ireland Spending Pulse survey, the city experienced a 17% total rise in spending over the previous weekend, with last Friday seeing the year’s highest total spend on hotels.

It must be noted that there were also several other sporting and cultural events spread throughout the city which will also have contributed to the increased spend. However, the lion’s share can still likely be attributed to the ‘Swiftonomics’ effect.

It is an interesting data point when you consider it alongside the June Credit Union Consumer Sentiment Survey which noted a marked up-tick in consumer confidence, following 4 consecutive months of decline before that. However, the same survey noted that still just four in ten consumers say their household income is above their living costs.

Perhaps this points to consumers prioritising summer entertainment as a reprieve from increasingly frugal spending habits. It bears watching if this can be sustained or if there will be a pull-back in consumer spending in the latter part of the year, if belts are to be tightened once again.

Our Portfolio Companies Are Hiring

WH Scott Group is recruiting a Chief Financial Officer. WH Scott Group is a market leader in the UK & Ireland in the design, fabrication, supply, inspection and maintenance of equipment used in regulated, highly technical lifting and industrial markets. It is undergoing a period of rapid expansion both organically and through acquisition. This role will involve managing financial performance, leading value-add initiatives as well as executing and integrating acquisition opportunities. 

Irish Rollforming is recruiting a Finance Director. Irish Rollforming was first established in 2010 by Liam O’Sullivan as a single sheet cladding manufacturer and is evolving to become a leader in the production of highly accredited insulated panelling. The Finance Director will drive reporting, analysis and strategic alignment as the company embarks on a stage of high growth.

If you know anyone who might be interested in the roles outlined above, please email Recruitment@renatus.ie ovisit our website at: https://go.renatus.ie/e/512701/2024-05-26/7frdws/1515406058/h/yBsyZr8Lt1lSOPgmuGd5C1_DzeGjRL_MUFFP8oToYP8careers/. Alternatively, feel free to reach out directly to any Renatus team member.  

The Real Deal 2024 Highlights

For those of you who may have missed The Real Deal, or simply want to recap on the day, we have highlighted some insights shared by our distinguished guest speakers, composed of prominent Irish business leaders and entrepreneurs. 

The conference commenced with the highly anticipated “Deal Of The Year” interview featuring keynote speaker Niall Molloy, CEO of Echelon Data Centres. Dive into the full interview below where Niall spoke about his early career, property development, the next wave of Irish investment, data centres, AI, and more. View Niall Molloy’s Interview    

You can also explore the wealth of knowledge shared by all our panellists throughout the day, now accessible to view below: The Real Deal 2024 Video Library

M&A Activity

Keywords Studios set to be acquired by EQT AB

Deal Details: Keywords Studios is set to be acquired by EQT. The total consideration is reported to be c. £2.2 bn (equating to ~20.1x EV/ EBITDA). The offer must be approved by shareholders representing at least 75% of the votes cast at Keywords’ forthcoming general meeting.

Keywords Studios is an Irish video game services company. It was founded in 1998 by Giorgio Guastalla and Teresa Luppino. The company is publicly listed on the London Stock Exchange. In FY Dec’23 it reported a turnover of c. €780.4m which converted to EBITDA of c. €109.0m.

EQT AB is a Swedish private equity firm, headquartered in Stockholm.

Advisers:
Keywords Studios:
Legal: DLA Piper led by Matthew Cole, Jon Earle, Karin Kirschner, Blayre McBride, Kate Kinsella, Darach Connolly and Martin MacLeod.

EQT:
None mentioned.


Renatus Comment: Since its IPO in 2013, Keywords Studios has become a prolific M&A machine in its own right, having completed c.70 deals in that span. Despite its successful acquisition-led growth strategy, its share price struggled last year and rumours of a potential take-private began to surface. The latest offer of £24.50 per share reflects a premium of roughly 67pc to Keywords’ closing price of £14.70 per share on May 17th. It will now be interesting to see how the company operates under private ownership.

Buyout deals are once again increasing in popularity with global activity led by private equity firms up 41% to $286 billion during the first half of the year. There were reportedly c. 17 bids made in Q4 last year for UK-listed companies with a further dozen made in Q1’24.

Source: Keywords Studios Press Release

FDT. Consulting Engineers and Project Managers acquired by NIRAS Group A/S

Deal Details: FDT. Consulting Engineers and Project Managers Limited (‘FDT’) has been acquired by NIRAS Group A/S. Deal consideration was not disclosed.

FDT is a Dublin-based provider of process engineering and project management services. Established in 1991, the business was owned by John Regan, Aoife Hamill, Michael Rafter, John Hanley, Daragh Byrne, Vincent Lane, Jerry Cronin, Robert Gaughan and Managing Director John Hanley. The business does not report turnover or EBITDA information.

NIRAS Group A/S is a Danish-based engineering consultancy firm. It reported FY Dec’23 turnover of c. €510m, converting to an EBITDA of c. €22.3m.

Advisers:
FDT. Consulting Engineers and Project Managers:
Corporate Finance: Pegasus Capital led by Dónal O’Connell, Anthony Marinos and Ethan O’Farrell.
Legal: Clark Hill Law led by Edward Johnston, William Brophy, Sean Nolan, Gavin Halpin, Aoife Sheehy and Aine Quinn.

NIRAS Group A/S:
Legal: BHSM LLP led by Joe McVeigh, Brenda Ntambirweki, Stephen McVeigh, Cian Smith, Richard Lee, Conor O’Farrell, and Siobhán Whelan
Tax: PWC

Renatus Comment: This deal marks the second acquisition by NIRAS in Ireland, having acquired Mayo-based Dolmen Engineering in June 2022, further strengthening the Danish multinational’s presence in the Irish market. Similar to Dolmen, FDT also specialises in the Life Science and Food & Beverage sectors. From its new Irish base in Castlebar, NIRAS is developing a full-service consultancy platform to capitalise on the continued growth of these core pillar industries within the Irish economy.

Source: Irish Independent

Abbey Insurance Brokers acquires Martin Carey Insurance

Deal Details: Abbey Insurance Brokers (Abbey Autoline) has acquired Martin Carey Insurance. Deal consideration was not disclosed.

AbbeyAutoline is one of Northern Ireland’s biggest insurance brokers. It was formed in 2020 when Abbey Insurance and Autoline Insurance merged. In FY Dec’22 it reported a turnover of c. £28.0m, converting to an EBITDA of c. £7.2m.

Martin Carey Insurance is a family-owned insurance broker, based in Co. Fermanagh. It was established by Martin Carey in 1984 and provides home, motor, business, farm and vehicle insurance. The business does not report turnover or EBITDA information.

Advisers: None mentioned.

Renatus Comment: This acquisition of Martin Carey Insurance is the second family-owned broker acquisition since AbbeyAutoline’s merger, with the company having also acquired family-owned BMG Insurance in 2022. This investment strengthens its position as one of the largest brokers in Northern Ireland. This deal continues the trend of widespread consolidation in the insurance industry with firms such as PIB, Prestige Insurance and Hastings Insurance, among the most active recent buyers. 

Source: Irish News

Renaissance Contingency Services acquired by Northamber PLC

Deal Details: Renaissance Contingency Services has been acquired by Northamber PLC.

Renaissance Contingency Services is a Dublin-based service provider focused on making IT environments more secure and compliant. The business was owned by Michael Conway and Denis Woods. It does not report turnover or EBITDA information.

Northamber PLC is an AIM-listed, distributor of IT, AV, and cyber security solutions. In FY Jun’23 it reported a turnover of c. £67.1m.

Advisers
Renaissance Contingency Services:
None mentioned.

Northamber PLC:
Financial: Capital Markets Limited.

Renatus Comment: This acquisition is set to enhance Northamber’s focus on cyber security, a segment it has operated in for thirty years, while also expanding its reach into Ireland. It follows its recent purchase in April 2024 of UK-based Tempura Communications, underscoring its strategy to grow its presence in the UK and mainland Europe both organically and through strategic acquisitions.

Source: Northamber PLC Press Release

Fortus Group acquires Secure Access Technologies

Deal Details: Fortus Group has acquired Secure Access Technologies. Deal consideration was not disclosed.

Fortus Group is an Irish-founded security solutions distributor and remote monitoring business, operating out of locations across Ireland, the UK, and the Netherlands. It was founded by current Executive Chair Brian Honan and is currently led by CEO Mark Brophy. In Dec’22 it was announced that the business had received an investment of c. €14.5m from AIB. It does not report turnover or EBITDA information.

Secure Access Technologies is a leading distributor of Access Control solutions in the UK, specialising in Electric Locking, Door Entry and CCTV products. It was owned by Tony and Sandra Richards. The business does not report turnover or EBITDA information.  

Advisers:
Fortus Group:
Financial: Azets Ireland led by Jack Swinburne, Tom Kenny, and PKF Francis Clark led by Tom Slade.
Tax: PKF Francis Clark led by Nicola Manclark and Callum West.
Legal: Eversheds Sutherland led by Jonathan Ennis and Vanessa Lawlor.

Secure Access Technologies
Legal: Ashtons Legal led by Mohammed Haleem.

Renatus Comment: This strategic acquisition marks another milestone for Fortus Group as it continues to expand its footprint and enhance its service offerings in the security sector. This deal follows its recent acquisitions of PG Security Systems, Specialised Security Products, Red Rhino Monitoring, Enterprise Security Distribution and RE:SURE. Consolidation remains a clear trend in both the B2B and B2C alarm and security markets with players such as Action24 (B2C) and Netwatch (B2B) remaining active in the space following private equity backing.

Source: Fortus Group Press Release

Circle K acquires 9 Pelco Stores

Deal Details: Circle K has acquired 9 Pelco forecourt convenience stores. Deal consideration was not disclosed. 7 of the 9 sites are in Dublin with one each in Meath and Westmeath.

Circle K is a US-based forecourt retailer. It is owned by Alimentation Couche-Tard, Inc. Circle K Ireland is led by Ciara Foxton.

Pelco is a convenience retail group. It was established by Paul & Lynda Fitzgerald in 2007. In FY Dec’22 it reported a turnover of c. €62.4m which converted to EBITDA of c. €1.9m.

Advisers:
Pelco:
Deal Advisory: BDO led by Richard Duffy, Colin Fahy and Max Bingham.
Legal: ByrneWallace LLP led by Eamonn Carey, Paraic O’Kennedy, Zelda Deasy, Orla Riddell, Aisling Brennan, Emmet Connolly and Caroline Matson.

Circle K:
None mentioned.

Renatus Comment: This deal increases the number of Circle K-owned and operated stores from 168 to 177. It also has a dealer partner network of 242 locations. The company has grown its presence in the Irish market since its entry in 2016, having invested a reported total of c. €230m since then. Interestingly, it has targeted expansion in both the forecourt and convenience markets completing several other similar deals including that of 10 Londis stores in 2021.

Source: RTE 

MFC Foods acquires Old Mill Confectionary

Deal Details: MFC Foods acquires Old Mill Confectionary. Deal consideration was not disclosed.

MFC Foods t/a Dessert First is a dessert-focused food company that offers food service & catering along with retail products. It is owned by John O’Connor, Jack Starling, Andrew Byrne and Margaret Fleming. It does not report turnover or EBITDA information.

Old Mill Confectionary is a Cork-based producer of fresh cream and cakes. It does not report turnover or EBITDA information.

Advisers:
Old Mill Confectionary:
Corporate Finance: Benchmark International.

MFC Foods:
None mentioned. 

Renatus Comment: This marks the second acquisition in 12 months by Dessert First. The aim of the acquisition is to expand the Old Mill brand nationwide and create further employment in Cork. Since being founded by Margaret Fleming in 2010, Dessert First has expanded its offering across food service & catering. It is hoped that this deal will preserve the legacy of the Old Mill brand as well as paving the way for national growth.

Source: Benchmark International Press Release

Management Team of Profast completes MBO

Deal Details: The management team of Profast has completed an MBO. The deal consideration was not disclosed.

Profast is a Belfast-based supplier of fasteners, fixings, window and door hardware to the construction and manufacturing sectors. In FY Dec’23 the Group reported turnover of c. £20.6m which converted to an EBITDA of c. £1.1m. The business was owned by Helen and Brendan Flynn.

The management team completing the buyout is led by Stephen Clarke (CEO), alongside Craig Milne (COO) and Jonathan Aiken (CCO).

Advisers:
Deal Advisory: BDO Northern Ireland led by David Warnock.
Legal: Elliott Duffy Garrett led by Kevin McVeigh.

Renatus Comment: The management team taking the reins in Profast has extensive experience in large-scale public and private sector projects. The group has worked on many landmark projects including Windsor Park in Belfast, the Aviva Stadium and the Titanic Museum. The MBO team has stated that they have ambitious plans for growth, aiming to become an even more influential player across the Island of Ireland as well as targeting expansion into the UK.

Source: Irish News

Deal Updates & Other News

Majority stake in Press Up hospitality group ‘to be taken by London equity firm’

Deal Details: As reported by the Business Post, Cheyne Capital, a London-based alternative investment manager, is poised to acquire a majority equity stake in Press Up. Despite the impending change in ownership, Press Up’s executive team will retain leadership of the day-to-day operations. This development marks a significant new chapter for the renowned hospitality group, recognised for popular venues across Ireland including Wowburger, Elephant & Castle, The Workman’s Club, Dime Coffee, Stella Cinema, and Wagamama, among others.

Source: Business Post

Company Performance

EBITDA  is an accounting term and is often the best indicator of profitability in non-capital intensive businesses before financing and tax are considered. In capital-intensive businesses EBIT or EBITDA less average Capital Expenditure are often better measures. YoY is an acronym for the year-on-year movement in turnover, EBITDA, etc.

Andrews Group Limited, trading as Andrews Flour, is a Belfast-based flour milling company that provides quality flours used in both household and commercial baking. The company is mainly owned by the Moreland family with Michael Moreland having the largest shareholding.

In its financial year to September 2023, the group reported a turnover of c. £44.2m, a year-on-year increase of 10.6%. This converted to an EBITDA of c. £2.8m, a year-on-year increase of 41.2%. 

The business finished the year in a net debt position of c. (£1.7m), with an increase in cash of c. £0.8m on FY Sep’22. The largest post-EBITDA cash movements were from the repayment of bank loans and cash released from working capital.

The company employed an average of 75 people over the period at a total cost of c. £3.3m.

Fundraisings

Who: HR Duo, is a Dublin-headquartered, human resources technology company, which was founded two years ago.

What: The company has secured c. €1.7m in venture debt funding from Salica Investments.

Why: The capital infusion will provide the company with the resources to accelerate its growth in the UK market, which it entered last June.

Advisers: Wallace Corporate Counsel led by Alan Ryan, Michael Bambrick, Ronan McNabb, and Graham J. Coyne.

Source: Business Plus

Who: Lua Health, is a workplace wellbeing start-up based in the Business Innovation Centre at the University of Galway.

What: The company has raised €500k in pre-seed funding led by Enterprise Ireland and Growing Capital.

Why: The capital infusion will help the company with its development of AI algorithms that can measure mental wellbeing issues such as stress, burnout, depression and anxiety from how someone writes or speaks.

Advisers: 
Legal: Wallace Corporate Counsel led by Alan Ryan and Graham J. Coyne.

Source: Silicon Republic

Who: Solidroad, an AI training and onboarding platform, founded in 2023 by Mark Hughes and Patrick Finlay.

What: The business has raised funding of c. €1.2m from a collection of angel investors including Jack Pierse, Dan Kiely, Anne Heraty, Louise Phelan and Ciaran Lee.

Why: The funding will be used to help fuel the company’s growth plans.

Source: Sunday Business Post.

Who: ByoWave, a company that makes accessible computer game controllers for people with disabilities.

What: The company has raised funding of c. €1.5m from investors including Irrus Investments and Kadsura Unlimited Company which includes Smyths Toys directors Patrick, Anthony and Tony Smyth.

Why: The investment will be used to bring the Proteus product to market and target US expansion.

Source: Sunday Independent

Who: Digital Iron, a Belfast-based company that has designed a platform that uses artificial intelligence and machine learning to help dealers quickly diagnose problems with heavy machinery.

What: The company has raised $2m. Investors include Seedcamp, Concept Ventures, RTP Global and FJ Labs.

Why: The investment will be used to help drive expansion.

Source: Business Post

Executive and Board Appointments

Orlaigh Matthews 

Source:
(Google Images & LinkedIn)

Stephen Keogh

Source:
(Google Images & LinkedIn)

Fergal O’Riagain

Source:
(Google Images & LinkedIn)

@RenatusCapital Tweets

47.4

The level of the AIB Purchasing Managers’ Index for June (down from 49.8 in May), according to @AIB

c. 1/3

The proportion of overall electricty demand in Ireland met by renewable energy sources in June, according to @Eirgrid

€5.9bn

Ireland’s total tax receipts in June (up by €1.6bn on the same month last year), according to @DeptofFinance

17%

The total increase in consumer spending in Dublin last weekend vs. the previous weekend, according to @BankofIreland.

About Renatus

Renatus was established in 2014 to provide growth funding to growing Irish SMEs and to partner with ambitious management teams to help companies reach their full potential.

Renatus targets companies with sustainable earnings of €1m+ and valuations typically in the range of €5m – €20m. Our typical solutions include:

  • Succession planning
  • Management buyouts
  • Management buy-ins
  • Growth financing – both organic and acquisition growth financing
  • Full and partial share sale

Our Family of Investments

Current Portfolio:

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